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Today's Momo Momentum Stock Is Williams Companies (WMB)

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

Trade-Ideas LLC identified Williams Companies ( WMB) as a momo momentum candidate. In addition to specific proprietary factors, Trade-Ideas identified Williams Companies as such a stock due to the following factors:

  • WMB has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $192.7 million.
  • WMB has a PE ratio of 71.3.
  • WMB is currently in the upper 30% of its 1-year range.
  • WMB is in the upper 25% of its 20-day range.
  • WMB is in the upper 35% of its 5-day range.
  • WMB is currently trading above yesterday's high.
  • WMB has experienced a gap between today's open and yesterday's close of 0.8%.

'Momo Momentum' stocks are valuable stocks to watch for a variety of reasons including historical back testing and price action. Market technicians refer to such stocks as being in a mark-up phase before a possible distribution period and price decline. Technical analysts and traders frequently find that the factors referenced above tend to create a temporary burst of strong wind in a stock's sail. Nevertheless, all successful traders must excel at maximizing gains while keeping losses to an absolute minimum. For that reason, the holding period on momo momentum stocks must always be a primary consideration, and this part of the puzzle is ultimately at the discretion of each individual's risk tolerance and portfolio risk management skills.

EXCLUSIVE OFFER: Get the inside scoop on opportunities in WMB with the Ticky from Trade-Ideas. See the FREE profile for WMB NOW at Trade-Ideas

More details on WMB:

The Williams Companies, Inc. operates as an energy infrastructure company. The stock currently has a dividend yield of 3.7%. WMB has a PE ratio of 71.3. Currently there are 5 analysts that rate Williams Companies a buy, no analysts rate it a sell, and 5 rate it a hold.

The average volume for Williams Companies has been 5.7 million shares per day over the past 30 days. Williams Companies has a market cap of $29.8 billion and is part of the basic materials sector and energy industry. The stock has a beta of 1.23 and a short float of 2% with 3.04 days to cover. Shares are up 12.7% year-to-date as of the close of trading on Tuesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Williams Companies as a buy. The company's strengths can be seen in multiple areas, such as its expanding profit margins and increase in stock price during the past year. We feel these strengths outweigh the fact that the company has had sub par growth in net income.

Highlights from the ratings report include:

  • 38.99% is the gross profit margin for WILLIAMS COS INC which we consider to be strong. Regardless of WMB's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, WMB's net profit margin of 8.00% compares favorably to the industry average.
  • WILLIAMS COS INC's earnings per share declined by 16.7% in the most recent quarter compared to the same quarter a year ago. The company has suffered a declining pattern of earnings per share over the past two years. However, we anticipate this trend to reverse over the coming year. During the past fiscal year, WILLIAMS COS INC reported lower earnings of $0.64 versus $1.16 in the prior year. This year, the market expects an improvement in earnings ($1.11 versus $0.64).
  • WMB, with its decline in revenue, slightly underperformed the industry average of 0.2%. Since the same quarter one year prior, revenues slightly dropped by 3.4%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
  • Compared to where it was a year ago today, the stock is now trading at a higher level, regardless of the company's weak earnings results. Looking ahead, the stock's rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that the other strengths this company displays justify these higher price levels.
  • The change in net income from the same quarter one year ago has exceeded that of the Oil, Gas & Consumable Fuels industry average, but is less than that of the S&P 500. The net income has decreased by 13.0% when compared to the same quarter one year ago, dropping from $161.00 million to $140.00 million.

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